The deal is worth about $30 million based on Resource Development’s current share price.
Mineral Resources, in return for receiving Resource Development scrip, will work with the new owner via services contract and provide a loan to enable Resource Development to finance development of the Ant Hill and Sunday Hill manganese projects south-east of Nullagine in the Pilbara.
The company will also support Resource Development’s efforts to expand its workload in the mining and energy services sector.
Mineral Resources has been focused on providing mining services to iron ore and lithium projects and regards the manganese deposits as non-core.
The company said in its announcement that its core focus will increasingly be “on assets that have significant scale and mining life”.
It added that the manganese assets more relevant in scale to a company like Resource Development which can provide the level of attention needed.
Mineral Resources added it will support Resource Development in its aspirations to grow the volume and value of project work in the mining, energy and infrastructure sectors at a level that complements its own contracting and mining services focus.
The deal is going ahead even though both tenements are at present subject to forfeiture applications lodged by non-listed Black Range Mining.
Mineral Resources is defending both applications. At this stage, no date has been set for a hearing.
Mineral Resources has a market capitalisation of $2.75 billion, while Resource Development is worth $10.1 million.
Manganese fourth most used metal
Manganese is the fourth most used metal in terms of tonnage after iron, aluminium and copper, and 90% of all manganese consumed annually goes into steel as an alloying agent.
There is no substitute for manganese in the steel-making process in terms of low price and technical benefits of its ability to combine with sulphur.
According to Geoscience Australia, Australia has 11% of the world’s economically viable manganese resources, behind the Ukraine, South Africa, Brazil and China.